United HealthCare to Acquire MetraHealth, Creating the Nation's Largest Health Care Management Services Company

Strategic Insights -

United HealthCare Corporation and MetraHealth Companies Inc. have announced a definitive agreement under which United HealthCare will acquire MetraHealth. The transaction will create the nation's largest health care management services company, with annual revenues of more than $8 billion and more than 40 million enrollees in various programs providing health care management products and services. The combined enterprise will offer its existing and new customers access to a broad range of high-quality, affordable health care products, from integrated network-based care to diverse indemnity insurance offerings and specialty care programs.

Key Takeaways:

  • The acquisition will create the nation's largest health care management services company, with annual revenues of more than $8 billion and more than 40 million enrollees.
  • United HealthCare will pay $1.15 billion in cash and $0.5 billion of 5.75 percent convertible preferred stock, for a total consideration at closing of $1.65 billion.
  • The combined enterprise will offer its existing and new customers access to a broad range of high-quality, affordable health care products.
  • MetraHealth will contribute its 29 HMO licenses, 72 point-of-service networks, and MetraHealth managed PPOs in more than 90 markets nationwide to the combined entity.
  • The acquisition is expected to be additive to United HealthCare's earnings immediately upon closing, and the company plans to benefit from marketing, operating, medical cost management, and administrative synergies.
  • The new company will have a unique set of products, skills, people, and new marketing opportunities, making it singularly positioned for growth and long-term success in a rapidly changing health care marketplace.
  • The combined organization will have a strong leadership position in serving large corporate customers, a major position in the small group business segment, and 29 HMO licenses.
  • The transaction is subject to customary federal and state regulatory approvals and other closing conditions, and is expected to close in the fourth quarter of 1995.

Statistics:

  • Annual revenues of the combined entity will be more than $8 billion.
  • More than 40 million people will be enrolled in various programs providing health care management products and services.
  • $1.15 billion in cash and $0.5 billion of 5.75 percent convertible preferred stock will be paid as part of the acquisition.
  • MetraHealth will contribute its 29 HMO licenses, 72 point-of-service networks, and MetraHealth managed PPOs in more than 90 markets nationwide.
  • The acquisition is expected to add 10 million covered lives to United HealthCare's existing enrollment.

Sources:

  • PRNewswire, "United HealthCare Corporation and The MetraHealth Companies Inc. Announce Definitive Agreement Under Which United HealthCare Will Acquire MetraHealth"
  • United HealthCare Corporation, "United HealthCare Corporation and The MetraHealth Companies Inc. Announce Definitive Agreement Under Which United HealthCare Will Acquire MetraHealth"